Snack makers report robust sales as epidemic keeps more people at home

Major snack retailers in China have seen burgeoning sales growth in the first half of this year, as more people stayed at home longer and enjoyed more snacks since the outbreak of the COVID-19 pandemic.

In the first six months, Hunan-based snack maker Yanjin Shop Food Co Ltd recorded sales revenue of 945 million yuan ($137 million), jumping up by 47.53 percent year-on-year.

During the same period, its net profit reached 130 million yuan, surging 96.44 percent year-on-year. The amount was higher than the wholeyear net profit it posted last year.

The Shenzhen-listed company generated most of its sales from selling fish tofu, dried beans, candied roasted seeds nuts, and potato chips. The retailer expected its sales to continue to grow in the third quarter, it said in a statement.

"Earlier this year, residents were staying at home for most of the time to prevent possible infections from the contagion. As the epidemic is getting under better control in China, people have returned to work. Still, many people have fostered a habit of spending more leisure time at home and thus consume more snacks," a research report of Sealand Securities said.

"On the whole, frozen food and fine dried noodles have seen better sales performances than dairy and meat products. Sales of snacks through e-commerce platforms, supermarkets and convenience stores have fared better than alcohol and condiments," the report found.

Other major snack and food makers have also done well in the first half of the year. During the period, Anhui province-based Qiaqia Food Co Ltd, one of the largest Chinese producers of roasted seeds and nuts, gained a net profit of 295 million yuan, up 33.97 percent year-on-year.

During the first six months, Chongqing-based Youyou Food Co, the country's main distributor of pickled chicken feet, realized a net profit of 129 million yuan, up 37.74 percent on a yearly basis, their latest earnings reports said.

It is notable that frozen food such as frozen dumplings and glutinous rice balls, frozen meat, and fish products have gained in popularity as they are convenient to cook and easy to preserve.

Zhengzhou Sanquan Foods Co Ltd, a major frozen food retailer, netted sales revenue of 3.73 billion yuan in the first six months, growing 22.6 percent on a yearly basis. Its net profit reached 452 million yuan, soaring 409.61 percent year-on-year.

Fujian province-based Haixin Foods Co Ltd, a producer of frozen food such as frozen fishball products, saw its net profit come in at 42.6 million yuan in the first half of the year, spiking 507.21 percent year-on-year.

More people have also fostered a hobby of baking while spending more time at home, and this has driven the consumption of yeast for baking cakes and pastries.

During the first six months, Angel Yeast Co Ltd, a Shanghai-listed major yeast maker in the country, achieved sales revenue of 4.34 billion yuan, up 16.91 percent year-on-year. Its net profit hit 719 million yuan, expanding 54.85 percent year-on-year. The company said it has benefited from family purchases and rapid sales growth through e-commerce channels.

"Quality-conscious Chinese consumers will spend more money on snacks in pace with their income growth. They are expected to have a rising demand for premium, healthy and safe snacks, and pay more attention to the appearance and packaging of snacks," said Neil Wang, president of consultancy Frost & Sullivan in China.

"Middle-end and high-end snacks are foreseen to draw more consumers, and lift the average price of snacks in the domestic market," he said.

Compared with developed markets such as Europe, the United States, Japan and South Korea, the per capita consumption volume and value of snack foods in China remain relatively low. Therefore growth potential of snacks in the China market remains bullish, said Frost & Sullivan.